Due Principal (Definition)

Due principal, simply put, equals the amount of principal that has come due on a loan minus the amount that has been paid.

$$ Principal That Has Come Due - Principal Paid$$

When a payment comes due, any portion of the payment that is allocated to principal will become part of due principal and increase the due-principal amount. When principal is paid, it will lower the due-principal amount.

Due principal has nothing to do with recency or payment amount. The waterfall application of a payment determines how the payment will apply to the separate loan components (e.g. interest, fees, principal). Waterfall application is determined by the payment type.


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